Yahoo Finance Canadian National Railway (TSE:CNR) Is Increasing Its Dividend To CA$0.79
Canadian National Railway Company's (TSE:CNR) dividend will be increasing from last year's payment of the same period to CA$0.79 on 30th of June. This takes the annual payment to 2.0% of the current stock price, which is about average for the industry.
See our latest analysis for Canadian National Railway
Canadian National Railway's Dividend Is Well Covered By Earnings
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, prior to this announcement, Canadian National Railway's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to expand by 21.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.
Canadian National Railway Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from CA$0.75 total annually to CA$3.16. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 2.8% per year. While growth may be thin on the ground, Canadian National Railway could always pay out a higher proportion of earnings to increase shareholder returns.
We Really Like Canadian National Railway's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Canadian National Railway that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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